What is a Capitalization Rate? - Definition

What is a Capitalization Rate? - Definition
A Capitalization Rate (also sometimes referred to as a Discount Rate) is used to help assess a current value on future earnings from a real estate property. The Capitalization Rate

can be determined in one step by dividing with the correct rate. Relationship goes as follows.

Cap Rate = R
Income = I
Estimated Value = V

R = I/V
I = V x R
V = I/R